Pain and gain

5 May 2020 By Lisa Jucca Follow @LJucca

The Covid-19 crisis is clouding the $27 bln bank’s growth prospects. CEO Carlo Messina may struggle to pay dividends he promised in a hostile bid for peer UBI. Still, the worse outlook makes it harder for the target’s shareholders to reject the scale and savings from a merger.

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Italy’s biggest retail bank, Intesa Sanpaolo, posted first-quarter net profit of 1.15 billion euros, up 10% from the same quarter a year earlier, and better than the 805 million euros forecast in a Reuters poll.

The bank promised to deliver net income of at least 3 billion euros in 2020 and at least 3.5 billion euros in 2021, against 4.2 billion euros in 2019.

Intesa Sanpaolo launched on Feb. 17 an unsolicited all-share bid for smaller peer UBI Banca.

The offer is conditional upon the purchase of two-thirds of UBI’s share capital, with the possibility to lower this threshold to 50% plus one share if necessary.

Italy’s GDP plunged 4.7% in the first quarter of 2020 from the previous quarter, the steepest quarterly drop in at least 25 years.

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